Tobacco giant Imperial Brands has said it remains on track to hit full-year earnings targets as cigarette price hikes helped push first half revenues higher.
The maker of Davidoff cigarettes, Rizla and Blu posted a 3.5% rise in adjusted organic revenues to £3.6 billion for the six months to March 31, with currency movements stripped out.
It said a 5.3% rise in tobacco prices helped buoy revenues, as well as changes to consumer buying patterns in the pandemic.
In the US – its largest market – first half sales jumped 8.8%, with a 62.5% surge for cigars.
But it saw cigarette sales knocked by lower trade at airport duty-free stores due to restrictions on global air travel.
Imperial’s half-year results showed underlying earnings, excluding the recently offloaded premium cigar business, rose 8.1% to £1.6 billion.
On a reported basis, pre-tax profits soared to £2.1 billion from £785 million a year ago.
It also saw losses in its next generation product business pared back by 62.5% to £83 million as it pledged to continue trials and investment in the fast-growing sector.
Shares in the group lifted 2% after the results.
Stefan Bomhard, chief executive of Imperial Brands, said the group’s five-year turnaround plan was beginning to bear fruit.
He said: “We have made a good start in implementing our new strategy to transform Imperial and remain on track to meet full year expectations.”
The group is targeting a “low-mid single digit” rise in organic adjusted operating profits for the full year.
Steve Clayton, fund manager of Hargreaves Lansdown’s Select UK Income Shares fund, which is invested in Imperial, said: “Imperial are generating plenty of smoke, but still without any real fire.
“The numbers were solid enough, but despite the reported growth, the underlying performance of the tobacco business was actually a small decline in profitability.”